As the world battles the corona virus, trade, investment and geopolitical conflicts are simultaneously simmering. At the same time, more than half of the world’s population has just been locked out of their homes at once. The International Think Tank estimates that this could have a long-term effect.
The Corona epidemic will push millions of people worldwide below the poverty line. The World Bank estimates that this will be a major obstacle to achieving the sustainable development goals. A report released by the bank a month ago said the global economy would shrink by 5.2 percent. The same report estimates that the global economic downturn could reach 8 percent in the worst case scenario.
A report released by the Congressional Research Service on Thursday states that the global economy lost डलर 900 trillion because of Corona. Economists say the world economy is in the throes of the Great Depression, which began 90 years ago in the United States.
Could this incident make a big difference in the world economy and trade chain? Or the birth of new economic powers? Economists do not see much immediate change. But he says the incident could be a new step in changing the equation of world economic power.
Searching for alternatives
Even before the launch of COVID-19, the world was looking for an alternative to the existing trading system. Protests against the world trade system began with Japan, the oldest economic power, emerging from the recession of 2008 with a currency war aimed at boosting exports by devaluing its currency. The same method was later used by China.
At a time when nations in the West are opposing China’s strategy, US President-elect Donald Trump has launched a trade war against China. Trump’s nationalist (introverted) policy of “America first” raised questions about the World Trade Organization and the international free trade system.
Moving towards the UK’s exit from the European Union and six years ago, India’s slogan ‘Make in India’ was gaining ground. Indian Prime Minister Narendra Modi reinforced this by announcing the ‘Self-Reliant India Campaign’ in May this year.
The economy after Kovid
No one has been able to predict when the world economy will emerge from the swamp of Kovid-19. However, if the virus does not start the second inning, economic growth is expected to return to normal from next year. The World Bank estimates that the global economy will grow by 4.2 percent in 2021. However, many believe that it will take at least another two years to get back to Pohor.
Most economic think tanks have shown that developed countries are most affected by the crisis caused by the corona virus. The International Monetary Fund has forecast that US economic growth could slow to 8 percent by 2020. Economic growth in Spain and Italy, which have been severely affected by the Corona, is projected to shrink by 12.8 percent this year. Then a big push is expected to hit France.
The economy of France, the main production house of Airbus, the largest airline, is expected to shrink by 12.5 percent this year. The economies of Britain and Mexico are also projected to fall by more than 10 percent. Of the developed economies, Germany is projected to lose only 7.8 percent and Japan 5.8 percent. Canada’s economy is projected to shrink by 8.4 percent.
The economist said that the rest of the world would stop buying the products of such developed countries which export valuable products and luxury goods to the world market. Swarnim Wagle explains. However, another economist, Dr Shankar Sharma, said it would be easier for the government to rescue even with loans as inflation would be almost zero in those developed countries.
China at the center
Shortly after China shut down Wuhan, the birthplace of the corona virus, the world’s leading carmakers began cutting production. The manufacturing industry around the world was affected as many raw materials and parts had to be procured from China. China produces more than a third of the world’s industrial products. It also exports large quantities of raw materials. China sells more than 60 percent of the world’s bacteria and chemicals used in medicine.
Countries like the United States, India and Australia have started embracing the path of self-reliance to reduce over-reliance on the same market. European traders have been tightening foreign investment laws for some time after Chinese businessmen began investing in European companies. New geopolitical conflicts are also expected to weaken China. Multinational companies operating in China have started relocating to Vietnam, Mexico and Ethiopia.
Although such activity is expected to affect China’s economy, the fund expects China’s economy to grow at a wider rate in the coming days. Despite the fact that most of the world’s major economies are negative this year, China is expected to grow by 1 percent, the fund said. The fund estimates that the economy will not be negative, but will grow by 8.2 percent next year, as it has been able to increase exports of medical supplies and some industrial products to world markets.
Apart from China, other developing economies are also expected to face a sharp decline this year, the fund said. In 2020, India’s economy will be 4.5, Russia’s 6.5